On April 22, 2011, USPTO Director David J. Kappos announced the impact of the budget reductions embodied in the fiscal year 2011 budget that finally was enacted on April 15, 2011. (Fiscal year 2011 runs through September 30, 2011.) The budget gives the USPTO the authority to spend only $2.09 billion, which is about $100 million less than its projected fee collections.

As a result of this significant fee diversion, the USPTO has decided not to implement fee-based prioritized examination (Track I), which was going to be available as of May 4, 2011.

Applicants interested in prioritized examination should consider whether their applications qualify for other programs, such as the Accelerated Examination, Patent Prosecution Highway, or Green Technology programs. An overview of these programs can be found on Foley's PharmaPatentsBlog (http://tinyurl.com/3wxvdgb).

As outlined on Director Kappos' blog (http://www.uspto.gov/blog/director/), the USPTO also is taking the following steps to reduce spending:

  • Plans for opening the first satellite office in Detroit, as well as consideration of other possible satellite office locations, are postponed
  • Hiring — both for new positions and backfills — is frozen
  • Information technology projects will be scaled back
  • Funding for Patent Cooperation Treaty (PCT) outsourcing will be substantially reduced Employee training will be reduced
  • All overtime is suspended

Director Kappos also clarified that the budget and operations for trademarks are “unaffected.”

USPTO operations have suffered the affects of fee diversion for years, but the current spending reductions come at a critical time for the USPTO and could undermine the USPTO's efforts to reduce the backlog of unexamined applications and improve patent examination quality. The current patent reform legislation pending in the U.S. House of Representatives effectively would put an end to fee diversion. The House Judiciary Committee voted in favor of the House bill (H.R. 1249) on April 14, and it may be up for a full vote when Congress returns in May. If this law becomes a reality, the USPTO may be in a better position to have the resources it needs to improve its efficiency and carry out its strategic objectives, outlined on its Web site (http://tinyurl.com/3djju5h).